Glad they are finally doing it and this should hopefully get much needed funding for our healthcare system. Whats shocking to me is that even with all the controversial bits taken out its still unpopular. I swear nz has the most hardheaded people out there.
RNZ-Reid Research poll last month found 43 percent in support of a CGT on investment properties
What is left for people to whine about?
I don’t know why farms should be exempt. It’s a business like any other and should be treated as such.
Even though farmers almost never vote Labour, National may get sympathy votes from others if the farmers jump up and down about how family homes for most people are exempt but not for farmers since it’s typically one title.
There’s also the extra challenge of farmers claiming a worker’s residence is not a rental, then sometimes it will be on the same title as the main house and sometimes they bought the neighbour’s farm and the houses are on two different titles so might get treated differently between farms.
I can see how it’s easier to exclude them and then expand later if needed.
Let them cry. There is no disputing that a farm is a business. They should be treated like any other business. If there is a house on a farm then the land the house sits on could be treated as a residence and given a different title. That’s what should happen anyway. I am sick and tired of farmers getting everything they want at the expense of everybody else who has to pick up the tab and conserve water. BTW same goes for lifestyle blocks. They are not even farms and they get treated like farms.
Would other businesses pay CGT on property sales under this proposal?
Businesses do buy and sell property so they should if they don’t. They also invest in shares so they should if they don’t. I don’t think an exemption should be made for any business. It’s unconscionable to put the entire burden on the citizens.
This is great - get it back in the debate again!
I’m disappointed they’re treading softly rather than ‘leading’ things, but I’m consoling myself hoping it’s the thin end of the wedge
They are forced to ‘tread softly’ due to the current public sentiment, even as is it doesn’t have public support. Its risky and bold in my opinion. If they did a full property CGT including peoples first home and farms they would be politically destroyed. Better to get a baseline established and go from there.
Yeah that sounds about right
This article says they are going to allow expenses:
They would then have to pay tax - Labour is proposing at a rate of 28 percent - on the difference between their purchase price 9or the value at July 1, 2027, whichever is later) and their eventual sale price, minus money spent on the property, when they sold.
Which explains the high tax rate.
I’m glad this is finally policy, it’s frankly embarrassing that we still don’t have a capital gains tax. Just think how much revenue we’ve missed out on by not passing it ten years ago.
I also think support will build over time.
Estimate is up to 700m a year which is a sizeable chunk of money. its orders of magnitude more than any of the national cuts with a single policy.
I have to admin, a 28% tax is ballsy.
Properties are usually owned for years and in a typical CGT you have a much lower rate than income tax (say, 15%) to try to avoid taxing inflation.
I suspect the opposition is going to call this a wealth tax in disguise.
Wealth tax would be on unrealized gains, this would only apply when you sell the property.
Yes but let’s imagine a different thing. Let’s say you buy a horse in 1996 for $5000. Inflation has meant the purchasing power of that money has halved since then, so to buy a horse of the same value in 2025 you’ll need $10k (and you have enough money since wages have increased faster than inflation).
Now let’s say you bought the horse in 1996 for $5k and sold it in 2025 for $10k and the government comes along and says you need to pay tax on your $5k profit. You’d say “no, I didn’t make a profit, the $10k now has the same purchasing power as the $5k in 1996, I sold it for exactly what I bought it for”. But now you’re paying 28% tax on your horse that you didn’t even make a profit on.
Don’t get me wrong, I’m excited to see such a high proposal, I was just days ago saying I didn’t think Labour sounded like they wanted a CGT at all, but taxing inflation is likely to be called out by the opposition.
Couldn’t you say the same thing for shares? You bought some shares for 5K, you sold them for 10K and now if you want to buy them again you have to pay 10K. Does this mean you didn’t realize any profit on your 5K investment?
There is no law that says you need to buy a house for the same price, most people will either downsize or upsize anyway.
But hey we can be generous and say you get to sell one house without paying CGT in your lifetime. Would that placate the masses?
Couldn’t you say the same thing for shares? You bought some shares for 5K, you sold them for 10K and now if you want to buy them again you have to pay 10K. Does this mean you didn’t realize any profit on your 5K investment?
No because the shares (in theory) have value behind them. If they went up overnight, it was because the value of the company changed not because the purchasing power of money changed. If they went up from 5K to 10K from 1996 until now, yes you could say it was inflation. But you also wouldn’t pay any tax because we don’t have a CGT.
But hey we can be generous and say you get to sell one house without paying CGT in your lifetime. Would that placate the masses?
I… don’t know. Maybe it would?
Here’s another question though. That old lady/man everyone knows of that owns dozens or hundreds of houses, do you think they ever sold any? They can still accumulate wealth without paying tax by simply hoarding it like a dragon.
That’s where a wealth tax works better. Because this tax only applies if you sell, if you have enough assets and lenders are confident they’ll continue to grow in value you can just keep buying more and then borrowing against them to cover your expenses year on year.
Yeah, so a wealth tax would be that every year you have to declare your net worth and pay a percentage of that as tax?
I wonder what the administration and enforcement cost of that would be. This very narrow CGT has on benefit in that there isn’t really much extra admin since most of the relevant parts are already done in one way or another.
Yep CGT is a simpler system to apply I think, but doesn’t address the real problem which is that once a certain amount of wealth has accumulated wealth begets wealth and the vast disparity ends up with a small class of people fully insulated from the problems their horading causes.
No because the shares (in theory) have value behind them.
So does property.
If they went up overnight, it was because the value of the company changed not because the purchasing power of money changed.
House prices go up because the value goes up too. The value is the neighbourhood, the schools in the area, proximity to public transport or shopping etc. Shops could be built someplace and the value might go up. A highway could be built nearby and the value would go down.
Here’s another question though. That old lady/man everyone knows of that owns dozens or hundreds of houses, do you think they ever sold any? They can still accumulate wealth without paying tax by simply hoarding it like a dragon.
That would be tackled with a wealth tax not a capital gains tax. I do think an argument could be made for a wealth tax for sure.
But if I had my way I would scrap all those taxes and replace with a financial transaction tax. This would be simply done by adopting a digital currency and taking a tiny cut on every transaction automatically. No muss, no fuss, no IRD, no nothing. Just a premined currency that the government controls the supply of.
So does property.
When we are talking about a change in value, I’m going to have to disagree with you. A house doesn’t have more value over time, unless you change the house.
House prices go up because the value goes up too. The value is the neighbourhood, the schools in the area, proximity to public transport or shopping etc. Shops could be built someplace and the value might go up. A highway could be built nearby and the value would go down.
I disagree. House values go up over time because we incentivise people to buy rentals but have a lack of supply, leading to people borrowing as much money as they can to be able to get a house at all. House prices are tied to how much people are able to borrow, more than they are tied to anything of value.
But if I had my way I would scrap all those taxes and replace with a financial transaction tax. This would be simply done by adopting a digital currency and taking a tiny cut on every transaction automatically. No muss, no fuss, no IRD, no nothing. Just a premined currency that the government controls the supply of.
I’m curious about the details of this. Most importantly, is it regressive? People hoarding wealth probably don’t make a lot of transactions with that wealth, it’s just shares sitting there being worth a lot. Where as people without much wealth have to spend all their money so end up paying more tax as a proportion of their wealth.
When we are talking about a change in value, I’m going to have to disagree with you. A house doesn’t have more value over time, unless you change the house.
Value has a different meaning economically and it’s pretty vague. Economically the only way to measure value is via the price of things. If you value a thing more you will pay more for it.
I disagree. House values go up over time because we incentivise people to buy rentals but have a lack of supply, leading to people borrowing as much money as they can to be able to get a house at all. House prices are tied to how much people are able to borrow, more than they are tied to anything of value.
It’s a complicated formula but in the end it’s supply and demand curves. What is the supply of housing in a place you want to live in? What’s the supply of money and credit available for you to buy it.
I’m curious about the details of this. Most importantly, is it regressive?
Theoretically yes but in practice no. The fact is most people don’t conduct repeated transactions. They earn money and then spend almost all of it. They don’t shuttle money back and forth, do high frequency trading or anything like that. The bulk of the taxes will be paid by sophisticated actors with excess money to move around.
People hoarding wealth probably don’t make a lot of transactions with that wealth, it’s just shares sitting there being worth a lot.
True but it’s rare when that property is not leveraged. You buy some land and you pay a transaction tax. Then you borrow against that land and you pay a transaction tax, you spend that money and you pay a transaction tax etc.
Where as people without much wealth have to spend all their money so end up paying more tax as a proportion of their wealth.
Wealthy people are constantly moving money around. They are constantly buying and selling shares, businesses, assets etc. They are also constantly borrowing money and paying it back. Also high frequency traders may make thousands of transactions every second.
